After finding that the Indian investors are heavily charged by the brokers for trading in the stock market, Nithin Kamath introduces an online discount trading platform for the convenience of investors. This internet-based trading network is popularly known as Zerodha.
And today, we will analyze what all factors proved supportive at framing Zerodha success story. That would cover its working strategy, features, business model, people acceptance, and how does Zerodha make money?
So, let us begin with the working strategy to derive insight into the working structure and acceptance of this unique business model.
Zerodha's working strategy
Zerodha was founded in the year 2010 with an aim of facilitating an online trading system that was not present earlier in India. And people were dependent on paying heavy commissions for buying and selling of stocks. Zerodha comes up with an innovative plan of reducing the burden on investors that earlier prevented some of the aspirants to avoid trading.
Now, this online trade assistance allows the investors to buy or sell stocks one is interested in and the trading analysis is done by the investors itself. The main advantage of Zerodha is that it charges zero commission from the traders that ultimately reduce the trade barriers that were earlier imposed. Apart from trading, it provides a one-stop solution for mutual fund investors and the learners who wanted to grasp valuable knowledge of the stock market.
It gives a user-friendly interface to the investors that displays the transections one has made along with the complete profile depicting net gain/loss.
Now, Zerodha success story of being India's biggest online broker revolves around its working structure. It offers zero brokerage charges to its clients and often people say that if it is charging no commission then how does Zerodha make money?
Well, the answer is very simple, it generates most of its revenue from transaction charges and in the form of account maintenance payment that is deducted annually. And due to a large number of trades are conducted every day, they manage to earn a good profit.
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Features of Zerodha
This online stock trading platform showcases its features in form of its products that offer varied functions as per the user's requirement. The key features provided are listed below as a part of Zerodha success story-
- User-friendly interface for giving a great experience to the traders. It is so convenient and simple that a new user can easily operate and understand its functions.
- It offers 3 types of order placing features for buying/selling stocks-
- Market order- Buying or selling at the current market price.
- Limit order- It allows a user to set a limit price while buying or selling.
- Stop-loss- Stop loss offers to operate the trade functions at a virtual price set.
- Displays a simple portfolio that depicts gains or loss as a whole.
- It showcase the charts of the companies listed in the stock market that gives a trading advantage on analyzing the position of the company in terms of growth.
- Other products offered are: Kite- is a transparent and simple trading platform.
- Coin- is a brokerage free mutual funds buying platform.
- Varsity- is an online learning platform that gives in-depth knowledge about the stock market.
The business model of Zerodha
Although, Zerodha reduces the involvement of middlemen but still works as a broker between the investor and the stock market. It creates the triangular chain between the investor, market, and itself.
Investor- The investor is the ultimate user of the application and trade-in different stocks available on the platform. They have to pay a minimal charge for opening a Demat cum trading account on Zerodha which is a one-time charge. After paying that charge you would be successfully registered as an investor and can enjoy their discounted or cheap services.
Stock market- The stocks that one traded in are indexed by the national stock exchange(NSE). Also, it boosts transparency in the trading experience by showcasing the overall performance of the companies listed in the Indian stock market.
Zerodha- It acts as a link between the investor and stock market for giving a simple buying and selling experience to its users. Though it not charge any brokerage amount on buying and selling but generate adequate revenue from a large number of transaction charges. And this business model creates a valuable impression over the Zerodha success story.
How does Zerodha make money?
This reading would get you a quick insight into how does Zerodha make money?
It is India's one of the most used online trading networks which are used by a large number of traders. And everyday a large number of transactions are conducted at this platform. Though the amount for a single transaction is less but buying/selling in a large volume by the people boosts the revenue of Zerodha.
And from the last few years, it has seen a rapid user as its potential customers. However, this contributes to more than 2% of investors in the stock exchange from its platform that would ultimately increase the revenue of Zerodha.
Transaction cost- Rs.20 or 0.03% for intraday trading, which means that if you buy a certain number of shares in a day and sell them the same day then you have to pay the above cost. Other than the intraday trade they charge a specified charge while selling of shares.
Account maintenance payment- They charge Rs. 300 annually as a part of account maintenance payment.
Take away
Zerodha works on an idea of attracting a large number of customers as traders by offering zero brokerage charges but managed to generate revenue from various indirect amounts such as the cost of account opening, transaction cost, and account maintenance payment.
Apart from this, we get to know about the Zerodha success story, business model, working structure and how does Zerodha make money?
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